Expect basic income grant promises as elections loom

Business Leadership South Africa (BLSA) CEO Busi Mavuso said South Africans should look out for more populist policies like the basic income grant (BIG) from the ANC as the 2024 elections draw closer.

Speaking in the latest instalment of the PSG Think Big series, Mavuso said the ruling party would likely, in a bid to retain power, introduce more populist policies and interventions in the coming months.

The first of these policies – the National Health Insurance (NHI) Bill – has been a significant topic of debate over the past few months. 

The National Assembly passed the NHI Bill in June of this year, despite many industry stakeholders’ staunch opposition.

While the government has said that an NHI scheme would ensure quality, equal healthcare for all, critics of the Bill, including private medical aid schemes, healthcare professionals, and trade unions, say the plan is unclear and unattainable.

Mavuso has been a vocal opponent of the NHI Bill. She has said the Bill is “unworkable” and could have catastrophic consequences if implemented, leaving all South Africans worse off.

“It’s going to be disastrous, and it’s not going to yield the positive results that government thinks it’s going to yield,” she told PSG.

Some NHI critics have said the government’s attempt to pass this Bill is nothing more than a ploy to gain favour ahead of the 2024 elections, and NHI will not be implemented in South Africa anytime soon.

Others have argued that, while this may be the case, these attempts could still have disastrous consequences. 

“Even though this may be some way off, given that Department of Health officials have said it may take a decade for NHI to be fully implemented, this provision drives away investment in the health sector and the opportunity to encourage the development of innovative healthcare delivery models for all South Africans,” said Discovery Health CEO Ryan Noach.

BIG expectations

Mavuso said that with the 2024 elections around the corner, the ANC could look to similar populist policies to gain favour with South Africans – and the BIG is a likely contender.

The ruling party has mentioned the implementation of a BIG for years, but little action has been taken to realise their promises.

The ANC announced its intention to implement a BIG, which will be financed through a wealth tax, closing tax loopholes, addressing base profit shifting by corporates, and a transactions tax, at the 2022 ANC policy conference.

BIG became a notable talking point during the Covid-19 pandemic when the government implemented the temporary social relief of distress (SRD) to support South African households.

The SRD grant is a temporary support grant of R350 issued during the Covid-19 pandemic but has been extended until the end of March 2024.

The continuation of the SRD grant sparked a conversation about implementing a permanent BIG modelled after this grant. 

“Work is underway to develop a mechanism for targeted basic income support for the most vulnerable within our fiscal constraints,” said President Cyril Ramaphosa in his 2023 State of the Nation Address. 

“This will build on the innovation we have introduced through the SRD Grant, including linking the data we have across government to ensure we reach all those in need.”

However, there was no mention of a BIG in Finance Minister Enoch Godongwana’s 2023 budget speech.

According to Mavuso, “We’re going to have to be aware as a country that there’s going to be a lot of populist policies and populist interventions that are going to come into play in terms of where we find ourselves at the moment.” 

“2024 is around the corner – and the ANC would obviously like to retain power, and I think they are going to throw everything at it to ensure they get at least 50%.”